Adani Wilmar was locked in a 5 percent upper circuit in early deals, even as all other group stocks were trading in the red again on February 9.
A day earlier, the FMCG firm posted a good set of numbers for the third quarter of the financial year 2022-23, with net profit and volumes rising 16 percent each.
At 11 am, the stock was trading at Rs 437.75, up 4.7 percent amid heavy volumes of 10.7 million shares on the NSE.
The stock is up for the third straight session after hitting a lower circuit for eight sessions in a row since the publication of the Hindenburg Research report, which accused the Adani group of stock manipulation and also flagged the conglomerate's debt burden. The Adani group has denied the charges but the group stocks have been hammered in the aftermath of the report.
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A strong quarter
Adani Wilmar's October-December quarter net profit came in at Rs 246 crore, while consolidated revenue from operations was at Rs 15,438 crore, growing 7 percent on-year.
On the operating front, EBITDA (earnings before interest, taxes, depreciation and amortization) jumped 20.2 percent year on year (YoY) to Rs 605.3 crore. Margins expanded to 3.9 percent from 3.5 percent from the year-ago period.
"We are expanding our product portfolio with region-specific products, ready-to-cook products, and category adjacencies," managing director & chief executive officer Angshu Mallick said.
N0 MSCI worries
Another positive trigger for the stock is that it has no MSCI review overhang. While all other Adani stocks are a part of the MSCI India index and are staring at the possibility of their weightage being reduced, Adani Wilmar is not part of the index yet.
MSCI said on February 9 that certain investors in Adani Group securities should no longer be designated as free float, and it is reviewing this status. The changes will be announced later in the day.
Any reduction in the weightages of Adani group stocks could trigger another selloff, as exchange-traded funds and index funds benchmarked to MSCI will rejig their portfolios. Adani Wilmar and NDTV are not part of the MSCI India index.
Clarification on GST raids
Goods and services tax (GST) officials reportedly searched Adani Wilmar’s warehouse at Parwanoo in Himachal Pradesh on February 8.
Soon after, the company came out with a statement that it was a "routine inspection and not a raid". "The officials did not find any irregularities in the operations and dealings conducted by the company," it said.
"The concerns specific to GST payments in cash, citing GST law under Rule 86B, the company is not required to pay tax liability in cash," it added.
Brokerage view
Analysts remain bullish on the stock. "Although Adani Wilmar competes in an extremely competitive business (edible oil and foods/FMCG), it has consistently delivered strong volume growth across segments," said Nuvama Institutional Equities in a results update.
It noted that strong demand on the back of festivities and weddings, gradual recovery in rural markets and a bumper kharif crop acted as tailwinds in Q3.
The firm has a "buy" rating on the stock, with a target of Rs 680 apiece.
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